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INDEQUITY GROUP LIMITED - Indequity Interim Results for the six months ended 31 March 2018

Release Date: 25/04/2018 16:00
Code(s): IDQ     PDF:  
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Indequity Interim Results for the six months ended 31 March 2018

Indequity Group Limited
Registration number: 1998/015883/06
Incorporated in the Republic of South Africa
“Indequity” or “the Group” or “the Company”
Share code: IDQ
ISIN: ZAE000016606

INDEQUITY INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2018

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION




                                                        31-Mar-2018      31-Mar-2017     30-Sep-2017
                                                         Unaudited        Unaudited        Audited
                                                           R'000            R'000           R'000
ASSETS
Property and equipment                                        2 126            2 150           2 058
Intangible assets                                               809              859             825
Subrogation and salvage recoveries                            2 061            2 449           2 095
Reinsurance portion of insurance contract
                                                                 38               84              42
provisions
Investments                                                   6 443           24 506           3 985
Deferred tax asset                                              303              106             250
Loans and receivables                                           413              319             145
Normal tax receivable                                             -               11               -
Cash and cash equivalents                                    33 145           24 797          45 781
Total Assets                                                 45 338           55 281          55 181


EQUITY
Capital and reserve attributed to the company's equity
holders

Share capital                                                    21              25              25
Share premium                                                17 036           28 101          23 268
Retained income                                              25 500           21 047          24 086
Foreign currency translation reserve                         -3 994                -               -
Non-distributable reserve                                         -               37            -292
Total Equity                                                 38 563           49 210          47 087


LIABILITIES
Insurance contract provisions                                 4 131            4 184           5 187
Deferred tax liability                                          391              558             352
VAT tax payable                                                 356                -              39
Dividends payable                                               349              234             215
Trade and other payables                                      1 548            1 095           2 301
Total Liabilities                                             6 775            6 071           8 094


Total shareholders' equity and liabilities                   45 338           55 281          55 181
       CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME


                                                     6 Months Ended   6 Months Ended      Year Ended
                                                        31-Mar-2018      31-Mar-2017     30-Sep-2017
                                                          Unaudited        Unaudited         Audited
                                                            R'000            R'000             R'000

Gross written premium                                        28 987           26 388          53 956
Less: reinsurance premium                                      -611             -888          -1 847
Net premium written                                          28 376           25 500          52 109
Change in provision for gross unearned
                                                                -70               28              12
premiums
Net insurance premium earned                                 28 306           25 528          52 121

Other income                                                    240               28              59
Investment income                                                -2              169           2 331
Total income                                                 28 544           25 725          54 511


Claims incurred, net of reinsurance                         -12 897          -12 626         -24 774
Gross claims incurred                                       -12 851          -12 657         -24 763
Reinsurance recoveries                                          -46               31             -11


Administration Expenses                                      -8 716           -7 270         -15 467
Acquisition costs                                            -2 048           -1 964          -3 924
Profit before taxation                                        4 883            3 865          10 346
Taxation                                                     -1 345           -1 022          -2 812
Total comprehensive income for the period                     3 538            2 843           7 534
Other comprehensive income, net of tax
 Items that may subsequently be reclassified to income:
Available for sale assets                                         -              373              44
Exchange differences on foreign
                                                             -3 994                -               -
operations
Total comprehensive income for the year                        -456            3 216           7 578


Profit attributable to:
- Equity holders of the parent                                 -456            3 216           7 578

Earnings attributable to the equity
holders

Basic earnings per share (cents)                              28.72            22.66           58.92
Diluted earnings per share (cents)                            28.72            22.66           58.92


Dividends per share (cents)
- Ordinary shares                                             13.50            13.50           22.25
- "A" class preference shares                                  2.38             2.34            3.92
          CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

                                        Share                                  Foreign
                                                                 Non-
                                       capital    Retained                     currency
                                                            distributable                      Total
                                         and       income                    translation
                                                               reserve
                                       premium                                 reserve
                                        R'000      R'000        R'000           R'000          R'000


Balance at 30 September 2016
                                        11 334      20 051       -336               -         31 049
Changes in Equity for the year ended
30 September 2017
Share issue (1 700 000 shares at
R10.00 each)                            17 000                                                17 000
Profit for the year ended 30
September 2017                                       7 534                                     7 534
Movement in Items that may
subsequently be reclassified to
income: Available for sale assets                                  44                             44
Dividend paid to shareholders                       -3 499                                    -3 499
Treasury shares purchased by
subsidiary                              -5 041                                                -5 041
Balance at 30 September 2017
                                        23 293      24 086       -292               -         47 087

Changes in Equity for the 6 months ended 31
March 2018
Profit for the 6 months ended 31
March 2018                                           3 538                                     3 538
Cancellation of shares                     -315                                                 -315
Dividend paid to shareholders                       -2 124                                    -2 124
Treasury shares purchased by
subsidiary                               -5 921                                               -5 921
Movement in Items that may
subsequently be reclassified to
income: Available for sale assets                                 292                            292
Exchange differences on foreign
operations                                                                      -3 994        -3 994
Balance at 31 March 2018
                                        17 057      25 500          -           -3 994        38 563
Balance as at 1 October 2016
                                        11 334      20 051       -336                -        31 049
Changes in Equity for the 6 months
ended 31 March 2017
Profit for the 6 months ended 31
March 2017                                           2 843                                     2 843
Dividend paid to shareholders                       -1 847                                    -1 847
Movement in Items that may
subsequently be reclassified to
income: Available for sale assets                                 373                            373
Share issue (1 700 000 shares at
R10.00 each)                            17 000                                                17 000
Treasury shares purchased by
subsidiary                                -208                                                  -208
Balance as at 31 March 2017
                                        28 126      21 047         37                  -      49 210
     CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

                                                        6 Months           6 Months
                                                                                          Year ended
                                                           ended              ended
                                                     31-Mar-2018        31-Mar-2017      30-Sep-2017
                                                       Unaudited          Unaudited          Audited
                                                         R'000                R'000            R'000


Cash generated/(utilised) by operations                    3 205              2 180            9 388
Interest received                                          1 007                778            1 771
Dividend received                                            111                145              295
Taxation paid                                             -1 380             -1 060           -3 027
Net cash from operating activities                         2 943              2 043            8 427

Movement in Intangible assets                                 -7               -327             -330
Movement in Fixed assets                                    -294             -1 348           -1 477
Movement in equity investments                            -3 645            -15 900            5 356
Movement in loans receivable                                  22                 20                -
Net cash used in investing activities                     -3 924            -17 555            3 549

Dividends paid to shareholders                            -1 990             -1 824           -3 495
Proceeds from issue of share capital                           -             17 000           17 000
Purchase of treasury shares                               -5 921               -208           -5 041
Share buy back                                              -317                  -                -
Net cash used in financing activities                     -8 228             14 968            8 464

Net movement in cash and cash equivalents                 -9 209               -544           20 440
Effects of currency translation on cash and
cash equivalents                                          -3 427                  -                -
Cash and cash equivalents at beginning of
the period                                                45 781             25 341           25 341
Cash and cash equivalents at end of the
period                                                    33 145             24 797           45 781
        EARNINGS PER SHARE

                                                        6 Months           6 Months
                                                                                          Year ended
                                                           ended              ended
                                                     31-Mar-2018        31-Mar-2017      30-Sep-2017
                                                       Unaudited          Unaudited          Audited


Basic earnings per share (cents)                           28.72              22.66            58.92
Diluted earnings per share (cents)                         28.72              22.66            58.92
Headline earnings per share (cents)                        30.76              24.05            59.70
Fully diluted headline earnings per share
                                                           30.76              24.05            59.70
(cents)

Number of shares
- in issue                                            13 060 632          13 105 632      13 105 632
- weighted average                                    12 321 050          12 546 251      12 786 823


The weighted average number of shares has been used in the calculations of earnings per
share, diluted earnings per share, headline earnings per share and fully diluted
headline earnings per share.



Reconciliation of net profit attributable to shareholders of the parent to headline
earnings
Net profit attributable to shareholders of the
                                                           3 538               3 216           7 534
parent (R'000)
Profit/Loss on sale of property and equipment
(R'000)
- Before tax                                                   -                  29              29
- tax                                                          -                  -8              -8
Profit/Loss on sale of shares held as available
for sale assets(R'000)
- Before tax                                                 349                 212             108
- tax                                                        -97                 -59             -30
Headline earnings                                          3 790               3 390           7 633
COMMENTS ON RESULTS

Indequity is delighted to announce that it has increased its basic earnings per
share by 26.7% when compared to the basic earnings per share reported in the previous
six-month period, from 22.66 cents for the six months ended 31 March 2017 to 28.72
cents per share for the six months ended 31 March 2018. It is noteworthy that in a
highly competitive marketplace, premiums increased by 10% and Indequity achieved a
net claims ratio of 44% (2017:48%) and therefore once again significantly
outperformed its industry sector peers. The decrease in the claims ratio bears
testimony to the discipline and patience exercised by the Group. Indequity will
continue to utilise its disciplined underwriting strategy to optimise the returns
of the Group. The Group continues to maintain a strategic hedge against possible
depreciation in the value of the Rand over the longer term and this has led to
investing a large portion of liquid company assets in US Dollar based investments.
In the period under review, this strategy translated into negative returns largely
as a result of the strengthening of the rand against the US dollar. The Group
continues to believe that this is a prudent strategy and will thus maintain a large
exposure to US Dollar investments. Furthermore, the Group brings to notice that it
has also directed significant cash resources towards its share buyback program during
the period under review. Indequity has always believed in having a rational and
unbending standard for measuring progress and its main objective remains to create
superior stakeholder wealth. We are thankful that the company has again achieved the
exceptional operational results that the stakeholders have become accustomed to.


ACCOUNTING POLICIES AND PREPARATIONS

The principal accounting policies applied in preparing the condensed interim
financial statements for the six months ended 31 March 2018 are in terms of
International Financial Reporting Standards (”IFRS”) and are consistent with those
of the annual financial statements for the year ended 30 September 2017. The interim
financial statements were prepared in accordance with and containing information
required by the recognition, measurement, presentation and disclosure requirements
of IFRS, IAS 34 - Interim Financial Reporting as well as the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council and in
compliance with the Listing Requirements of the JSE Limited and the Companies Act
(No.71 of 2008), as amended. The financial information has been prepared in
accordance with standards of IFRS that are currently effective. This may differ from
interpretive guidance from the International Financial Reporting Interpretation
Committee of International Accounting Standards Board. The condensed interim
financial statements have not been audited or reviewed by the Group’s auditors.


SEGMENT INFORMATION

No segment analysis has been prepared for the six months as the Group’s operations
are focused only on short-term insurance activities.
DIVIDENDS

The board has declared a interim dividend of 10.50 cents per Indequity ordinary
share ("Ordinary Share") (March 2017: 10.5 cents) and 1.84 cents per Indequity A
class preference share ("A Class Preference Share") (March 2017: 1.85 cents) for the
six months ended 31 March 2018, to all ordinary shareholders and A class preference
shareholders recorded in the books of Indequity at close of business on Friday, 25
May 2018. The group has a dividend cover of 2.37 times. The cash dividend timetable
is structured as follows: the declaration date is Wednesday, 25 April 2018. The last
day to trade cum-dividend in order to participate in the dividend is Tuesday, 22 May
2018. The shares commence trading ex-dividend from the commencement of business on
Wednesday, 23 May 2018 and the record date is Friday, 25 May 2018. The dividend is
to be paid on Monday, 28 May 2018. Share certificates will not be able to be
rematerialised or dematerialised between Wednesday, 23 May 2018 and Friday, 25 May
2018, both days inclusive.
 - The dividend has been declared out of income reserves.
 - The local dividend tax rate is (20%).

                                               Ordinary share    A Class Preference
                                              dividend (cents       Share dividend
                                                per Ordinary     (cents per A Class
                                                   Share)         Preference Share)
Gross local dividend amount for ordinary
shareholders / A class preference                    10.5               1.84
shareholders exempt from dividend tax
Local dividend withholding tax amount for
ordinary shareholders / A class preference           2.1                0.368
shareholders to pay the dividend tax
Net local dividend amount for ordinary
shareholders / A class preference                    8.4                1.472
shareholders liable to pay the dividend tax

  - Indequity's income tax reference number is 9887001718.
  - The group has 13 060 632 Ordinary Shares, 14 870 000 A Class Preference
    Shares and 11 669 680 B Class Preference Shares in issue on declaration
    date.
  - Both A Class Preference Shares and B Class Preference Shares are unlisted.
  - Payment number eight.
  - This interim report has not been audited or reviewed by the Group auditor.
  - This report has been published on 25 April 2018.


 ON BEHALF OF THE BOARD

 L Jansen van Rensburg     Chief Executive Officer
 JF Zwarts                 Chairman

 Directors:                LJ van Rensburg, TE Vorster, JF Zwarts*, G Williamson*,
                           AV van Jaarsveldt* (British), (*non-executive)
 Company secretary:        WS de Vries
 Transfer secretary:       Link Market Services South Africa (Pty) Ltd
 Sponsor:                  KPMG Services (Pty) Ltd
 Registered address:       First Floor, Cascade House, Constantia Office Park CNR
                           14th Avenue and Hendrik Potgieter Road Constantia Kloof
                           1709
 Postal address:           PO Box 5433 Weltevredenpark 1715
 Telephone:                (+27 11) 475 0816
 Fax:                      (+27 11) 475 0877
 Prepared By:              B Payne CA(SA) (Group Financial Manager) under the
                           supervision of TE Vorster CA(SA) (Financial Director).

Date: 25/04/2018 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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